Hungary and Luxembourg have re-negotiated the Convention on double taxation concluded around the regime change of 1990. The new agreement has been updated in line with the latest international legal standards and taxation challenges.

The new bilateral Convention for the Avoidance of Double Taxation with Respect to Taxes on Income and on Capital was signed – following a series of negotiations conducted since 2011 – on 10 March, by Minister for National Economy Mihály Varga and the Finance Minister of Luxembourg Pierre Gramegna on the sidelines of the EcoFin in Brussels.

The Convention, which enters into force as of 2016, serves a double purpose: on the one hand, it rules out the double taxation of the income of private persons and enterprises, and it provides guarantees against tax evasion on the other. Several regulations formulated in the new agreement ensure effective action by the National Tax and Customs Administration (NAV) against tax dodgers wishing to hide income. It provides opportunity, among others, for a wide-ranging exchange of information in tax matters, including bank data. The information obtained by NAV can thus generate fiscal revenues in case a wealth gain investigation unearths hidden assets on a Luxembourg bank account of a private person who is a Hungarian taxpayer.

Over the past years, Hungary has placed tax policy relations on a new footing with several countries, such as the United States, Germany, Great Britain and Denmark.

(Ministry for National Economy)